Preliminary estimate of UK Q2 GDP to show growth accelerating after a relatively subdued Q1

RBC Capital Markets notes:

The preliminary estimate of UK Q2 GDP is expected to show growth accelerating after a relatively subdued Q1. RBC's forecast is for expansion of 0.6% q/q but the BoE (and consensus) looks for 0.7% q/q. The industrial production sector is expected to have made a relatively strong positive contribution to Q2 growth but given its size it is still the service sector (at 78% of the economy) driving the bulk of the growth.

Construction output declined in both April and May so is set to be a drag on the initial estimate although, over time, upward revisions are possible. Despite interim methodology changes in the sector the official measure of construction output remains at odds with the more optimistic survey indicators. An outturn below 0.6% q/q could have market implications given growing expectations for the August MPC minutes to reveal hawkish dissenters edging the Committee towards a rate hike "around the turn of this year".